CEOE suggests gross pay so workers see taxes

CEOE suggests gross pay so workers see taxes

Antonio Garamendi, president of the CEOE business association, used his speech at the XXIV ATA Awards to argue that salaries could be much higher if not for the heavy tax burden. His proposal: workers would receive their full gross salary and pay their own social security contributions and IRPF (income tax) themselves, making them aware of the actual cost. This idea, raised at a business event, has peine the debate on who really pays for employment in Spain.

In the same speech, Garamendi attacked Labor Minister Yolanda Díaz, blaming her for taking social dialogue "to the ICU" and announced the association would not attend the meeting on the dismissal reform, calling the ministry's changes "vengeance." "The minister needs to rely on regulations because she cannot pass them through bills or decree-laws," he insisted.

What appears on a payslip and what does not

The core argument is that workers do not know the real cost of their job. The payslip shows their Social Security contribution and IRPF withholding, but not the employer's total cost. Some argue this opacity is deliberate: hiding the total cost between employer and employee prevents workers from seeing the full fiscal burden. The optimistic view is that seeing the gross amount would raise awareness; the pessimistic scenario warns that most lack the liquidity to cover the subsequent tax payment.

The discussion quickly turned to a practical problem: if the state stops withholding at source, who guarantees payment? Many households lack the balance to cover a quarterly tax bill of thousands of euros, and banks would collect their loans before the tax office. The company currently acts as a collector for administrative convenience, not out of commitment.

The employer cost not shown in the contract

A 45,000 euro gross annual contract does not cost that much to the company. On top of that figure, employer social security contributions and other charges raise the real outlay well above what is written on paper. This difference is what the association wants to make visible, and what many workers do not consider when negotiating their salary.

The proposal is also seen as a tactical move. Some interpret that the association seeks to justify future wage moderation by arguing the total cost is already unsustainable. Others see it as a legitimate call for fiscal transparency. The coincidence, however, is that the current system hides relevant information from employees.

VAT and gasoline: the same trick

The parallel with VAT is immediate. Prices are displayed with taxes included, so consumers never separate how much they pay for the product versus the state. A similar situation occurs with fuel: according to a calculation circulating in the debate, the price of a liter of gasoline before taxes is around 0.50 euros, and the difference to the final price is fundamentally fiscal. If this separation were visible on every receipt, the discontent would be difficult to manage.

Hence, several analyses conclude the proposal will never be applied. Not due to technical complexity, but because the official narrative needs citizens to believe their taxes return as services. Seeing the money leave their account every month would break that fiction.

Pensions and contributions: the core issue

The debate shifted to pensions. It is argued that a life insurance policy pays the agreed indemnity even to heirs, while a pension is only paid while the contributor lives, except in cases of widowhood or orphanhood. Someone who contributed for twenty years and dies before retirement does not recover what they contributed. The comparison with a private fund is inevitable and explains the distrust in the public system.

The counterargument is that the pension guarantees lifelong income, and some retirees collect for decades. Both are true and do not cancel each other out. The underlying question is whether workers should manage their own savings or delegate to the state, and there is no possible consensus there.

---

With these premises, the association's proposal is more of a political gesture than a viable reform. No one with economic responsibility would dare dismantle withholding at source. But the fact that it is raised aloud already says something about the fiscal discontent running through the country. How long will it take for someone to turn it into an electoral program?